2005 (2) TMI 809 - HC - VAT and Sales Tax

Summary

Issues: Determination of tax liability for milk food items under specific schedules of the Assam General Sales Tax Act, 1993.

Analysis:
The primary issue in this case is whether three milk food items, namely Amul Taza, Amul Gold, and Amul Slim "N" Trim Milk, manufactured by the petitioners, fall under the category of pasteurised milk as per the First Schedule or if they are considered as milk or milk products under the Second Schedule of the Assam General Sales Tax Act, 1993. The tax liability of these products hinges on this classification, as items in the First Schedule are exempted from tax, while those in the Second Schedule are taxable. The assessing authority had previously determined that these items were not pasteurised milk and hence were subject to tax, leading to the petition challenging this decision.

During the proceedings, the petitioners' counsel extensively relied on expert literature in dairy technology to demonstrate that the manufacturing process of the milk items aligns with pasteurised milk production. The court noted that the manufacturing process described in the writ application, which was not contradicted by the official respondents, supported the petitioners' claim that the items are indeed pasteurised milk. The court emphasized the quasi-judicial powers of authorities under the Act to decide the taxability of items, stressing the need for reasoned conclusions based on parties' contentions.

The court further highlighted that the assessing authority's role is crucial in determining tax liability, and the court's role is supervisory, not fact-finding. In this case, the court found that the impugned orders lacked specific reasoning for concluding that the items were not pasteurised milk, rendering them legally untenable. Consequently, the court set aside the orders and remitted the matter to the Commissioner of Taxes for a detailed determination, allowing expert opinions and inspections if necessary.

Additionally, the court maintained an interim order restraining tax collection on the items in question until the matter is resolved by the competent authority. The petitioners were directed to continue filing returns, with assessments on the turnover of the food items pending until the final determination. The writ petition was closed in accordance with the court's directions, emphasizing the need for a thorough and reasoned assessment of the tax liability of the milk food items based on expert opinions and proper evaluation of the manufacturing process.